TelexFree’s Merrill Concerned About Internet ‘Spectacle’

EDITOR’S NOTE: This is a follow-up to our Feb. 4 article that reported TelexFree figure James Merrill potentially could be forced to take the Fifth Amendment in front of a large audience at a music hall in Worcester, Mass., on Feb. 10.

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James Merrill

Forcing him to take the Fifth Amendment tomorrow at Mechanics Hall in front of an expected large crowd at a meeting of TelexFree creditors could affect his right to a fair trial in the criminal case against him in October, James Merrill argued yesterday in bankruptcy court.

Through attorney Robert Goldstein, Merrill argued that a “spectacle” easily could ensue and that all of it could end up on the Internet.

Trustee Stephen B. Darr’s plan to hold the meeting at the hall may set the stage for news outlets to photograph or record Merrill’s invocation of his right not to incriminate himself and for attendees with cell phones to do the same thing and “widely disseminate the spectacle on the Internet,” Merrill argued.

Merrill will “appropriately, and necessarily” invoke the Fifth if forced to appear “and will respectfully decline to answer any questions regarding” TelexFree, which filed for Chapter 11 protection on a Sunday evening in April 2014.

Shortly after the filing, state and federal regulators called TelexFree a massive, cross-border fraud. Darr went on to deem it a Ponzi- and pyramid scheme, and Chief Bankruptcy Judge Melvin S. Hoffman agreed. Merrill and Carlos Wanzeler, another TelexFree executive, were charged criminally in 2014, after an investigation by the U.S. Department of Homeland Security.

TelexFree, which operated over the Internet and may have produced about $3 billion in illicit transactions in about two years, was the top story in DHS’s Daily Open Source Infrastructure Report on April 17, 2014.

In the 2008 AdSurfDaily Ponzi scheme, accused operator Andy Bowdoin invoked his Fifth Amendment right at a civil proceeding while a parallel criminal investigation was under way. Some ASD supporters immediately used the Internet to circulate a story that Bowdoin was “too honest” to testify.

ASD, a $119 million Ponzi scheme that ultimately sent Bowdoin to prison, and TelexFree operated in similar fashion. Prosecutors have described TelexFree as having cult-like qualities.

Read Merrill’s brief. Hoffman has ordered Darr’s motion to compel Merrill’s attendance “continued generally.” How that would affect tomorrow’s meeting was not immediately clear.